How Trump’s Election Win Will Affect China’s Tire Industry

Trump’s election win was beyond most people’s expectation.

The result of U.S. presidential election was unveiled on Nov. 9. Republican candidate Donald Trump beat Democratic candidate, former U.S. Secretary Hilary Clinton and would become the next U.S. president.

The political situation in the U.S. has always been a crucial factor affecting the Chinese economy. The U.S. presidential election will inevitably affect every aspects of the Chinese economy.

Industrial analysts reckon that Trump administration is to cause significant impacts on China’s tire industry.

Currently, China’s tire export is confronting unprecedented difficulties due to the anti-dumping and anti-subsidy probe by the U.S. authorities. Will Trump’s election win exacerbate such situation?

New Round of Trade War May Start

Playing the Chinese card has been a necessity of every U.S. presidential candidate, Trump was not an exception.

In contrast with Hilary, Trump was a trade protectionist.

The most typical view of Trump during the election was that China’s participation in the WTO stole most American jobs in history.

He even claimed that if he was elected, he would impose 45% high tariffs on products import from China to protect the U.S. industries.

A renowned domestic think tank wrote an article saying that although the suggestion may not be implemented in the real world, it sent a very clear signal of trade war.

Trump may impose punitive tariffs on specific goods import from China, in particular the chemicals, steel and rubber products.

Statistics show that in 2015, China exported passenger car tires of 314 million kilograms to the U.S., down 42.7% year on year; and the truck and bus tire exports were 598 million kilograms, down 9%.

Over the past two years, affected by the anti-dumping and anti-subsidy measures taken by the U.S., China’s tire exports to the U.S. dropped sharply, but the U.S. remains the largest tire export destination of China.

An industry insider said that if a new round of China-U.S. trade war starts, China’s tire export must be affected greatly.

However, a research report says that although Trump’s words during the election have been hostile against China, he will be driven by economic opportunities in his policy towards China in practical.

Large Amount of Capital May Leave China

Trump believes that besides trade methods, he will make efforts to draw capital back to the U.S. to protect American enterprises.

He expects to withdraw the U.S. investors from China and offer more jobs to the Americans.

He said more than once that China must be punished.

Analysts reckon that some of Trump’s claims may attract more foreign capital flowing back to the U.S.

The first is cutting corporate income tax, which may be reduced from 35% to 15%, in a bid to ease the tax burden of the U.S. enterprises;

The second is imposing a one-off tax of 10% on U.S. enterprises that return overseas profits, in a bid to lure capital back;

The third is forcing large multinational enterprises moving Asian production lines back to the U.S., or he will impose a 35% tax rate on them.

Most U.S. tire giants have set up production bases in China.

In addition, setting up tire plants in the U.S. have been involved in the development plans by a number of tire producers, including the Chinese ones, and some have worked out their timetables.

The U.S. has a mature tire market. As the costs of China’s manufacturing industry ascend, building up U.S. plants is a practical method.

An industrial expert says that manufacturing industry turning back to the U.S. has become a new trend. It is not only driven by the internal force of the U.S. economy, but also attributable to the efforts of the U.S. government.

As a result, if Trump’s policies are implemented, large amount of capital may withdraw from China’s tire manufacturing sector to the U.S., said the industry insider.

Nevertheless, with regard to the U.S. presidential elections in history, the manifestoes of candidates were hardly implemented during their administrative terms.

The influences of Trump’s election win on China’s tire industry are yet to watch.